Earnings and employment from Pay As You Earn Real Time Information, UK: October 2023

• Early estimates for September 2023 indicate that the number of payrolled employees rose by 1.2% compared with September 2022, a rise of 369,000 employees; the number of payrolled employees was up by 3.8% since February 2020, a rise of 1,102,000.

• Payrolled employment stayed the same in September 2023 when compared with August 2023 decreasing slightly by 11,000 employees (0%); this should be treated as a provisional estimate and is likely to be revised when more data are received next month.

• UK payrolled employee growth for August 2023 compared with July 2023 has been revised from a decrease of 1,000 reported in the last bulletin to a decrease of 8,000, because of the incorporation of additional real time information (RTI) submissions into the statistics, which takes place every publication and reduces the need for imputation.

• Early estimates for September 2023 indicate that median monthly pay increased by 5.7% compared with September 2022, and increased by 21.7% when compared with February 2020.

• For Nomenclature of Territorial Units for Statistics (NUTS) 3 regions, annual growth in payrolled employees in September 2023 was the highest in Luton, with a rise of 3.8%, and was lowest in Camden and City of London, with a fall of 2.1%.

• The increase in payrolled employees between September 2022 and September 2023 was largest in the health and social work sector, a rise of 182,000 employees, and smallest in the administrative and support services sector, with a fall of 29,000.

• Annual growth in median pay for employees in September 2023 was highest in the transportation and storage sector, with an increase of 13.5%, and lowest in the health and social work sector, with a decrease of 0.3%; This decline in median pay growth for the health and social work sector is partly because of comparing against high lump-sum payments made in September 2022.

About the data in this release

Early estimates for September 2023 are provided to give an indication of the likely level of employees as well as median pay in the latest period. These early estimates are, on average, based on around 85% of information being available. They are of lower quality and will be subject to revision in next month's release when between 98% and 99% of data will be available. A revisions triangle is available for employees and median pay at the UK level.

Statistics in this release are based on people who are employed in at least one job paid through Pay As You Earn (PAYE), and monthly estimates reflect the average of such people for each day of the calendar month. This follows the introduction of a new methodology for monthly earnings and employment estimates in December 2019, designed to better align with international guidelines for labour market statistics. This differs from the methodology used before December 2019, which produced statistics based on the total number of people paid in a particular time period.

Early estimates for September 2023 indicate that there were 30.1 million payrolled employees (Figure 1), a rise of 1.2% compared with the same period of the previous year. This is a rise of 369,000 people over the 12-month period. Compared with the previous month, the number of payrolled employees stayed the same in September 2023, with a decrease of 11,000 people.

Note, this monthly change of 11,000 should be treated as provisional, because it is based on an early estimate of September 2023 employees. More information on revisions can be found in Section 11: Strengths and limitations.

When comparing the number of payrolled employees in August 2023 with the previous month, the number showed no change at 0%. This is no change from the earlier estimate reported in our previous bulletin, Earnings and employment from Pay As You Earn Real Time Information, UK: September 2023.

Annual growth in the number of employees remained broadly within a range of 1.0% to 1.5% from mid-2016 until 2019. Growth rates before mid-2016 were higher than 1.5% (Figure 2).

Starting around early 2019, employee growth began a slight downward trend. However, employee growth slowed more substantially past March 2020, coinciding with the coronavirus (COVID-19) pandemic, becoming negative in April 2020.

At the start of 2021, growth rates began to recover, and remained high as the labour market continued to recover from the effects of the pandemic. From April 2022 the annual growth rate has been falling. Through 2022 this fall would have been partially caused by the comparison against the increase in employee numbers from March 2021, which levelled off as we no longer compared against this higher baseline. However, since then, growth rates have continued to fall.

Early estimates for September 2023 indicate that median monthly pay was £2,264, an increase of 5.7% compared with the same period of the previous year.

Following a general trend of increasing pay growth between mid-2015 and mid-2018, pay growth tended to fluctuate around 3.6%, until 2020 when it became negative. This coincided with the coronavirus (COVID-19) pandemic and related economic and policy responses. From June 2020 median pay growth became positive again.

Through 2022 the growth rate of median pay continued to increase in line with pre-pandemic trends. Since the start of 2023 this trend has continued, but with more volatility caused by some months showing much higher growth rates.

In the three months to August 2023, the 10th percentile of the monthly pay distribution was £751, the 90th percentile was £5,423 and the 99th percentile was £15,047 (Figure 5). This means that:

• 10% of payrolled employees earned equal to or less than £751 per month

• 90% of payrolled employees earned equal to or less than £5,423 per month

• 99% of payrolled employees earned equal to or less than £15,047 per month

The regional figures in this bulletin are based on where employees live and not the location of their place of work. They include data for September 2023, and cover Nomenclature of Territorial Units for Statistics (NUTS): NUTS1, NUTS2 and NUTS3 regions. For further details, see our International geographies web page.

Numbers of payrolled employees in the UK for the regions shown in Figure 6 ranged from 794,000 in Northern Ireland to 4,319,000 in London in September 2023.

All regions are now above pre-coronavirus (COVID-19) (February 2020) levels.

Figure 6: Regional employee growth fell across the UK during 2020 and 2021, but subsequently recovered across all regions

Percentage change on same month in previous year, seasonally adjusted, UK, January 2017 to September 2023

Notes:

1. The latest period is based on early data and therefore is more likely to be subject to slightly more significant revisions. 

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London and Northern Ireland experienced higher growth than the UK average between January 2017 and early 2020, while the North East and Scotland experienced lower growth than the UK overall. Employee numbers within NUTS1, NUTS2, and NUTS3 regions are available in our accompanying datasets.

Over the course of the coronavirus pandemic, all regions' growth rates followed a similar pattern. Growth rapidly declined and became negative in April 2020, but from the middle of 2021 began to recover. As regions have caught up with their pre-coronavirus level, these high growth rates have started to fall back to rates seen historically before the pandemic.

Comparing September 2023 with the same period of the previous year for NUTS1 regions, changes in payrolled employees ranged from the highest being a 1.7% increase in Northern Ireland to the lowest being a 0.8% increase in Yorkshire and The Humber.

Examining NUTS3 regions, Camden and City of London experienced a decrease of 2.0% in payrolled employees in comparison with September 2022, and Luton experienced an increase of 3.8% (Figure 7).

Figure 7: Growth in payrolled employees varies across the UK

Percentage change on same month in previous year, seasonally adjusted, UK, NUTS3 level, September 2023

Notes:

1. The latest period is based on early data and therefore is more likely to be subject to slightly more significant revisions. 

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Median pay across the NUTS3 regions of the UK in September 2023 ranged from £1,923 in Leicester and Torbay to £3,501 in Wandsworth (Figure 8).

Inner London generally differs from Outer London, with median pay ranging from £2,252 in Enfield to £3,501 in Wandsworth. Median pay in September 2023 for London as a whole was £2,706.

Figure 8: Median pay varies across the UK

Median pay, seasonally adjusted, UK, NUTS3 level, September 2023

Notes:

1. The latest period is based on early data and therefore is more likely to be subject to slightly more significant revisions. 

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The industrial sectors in this bulletin are based on the UK Standard Industrial Classification (SIC) codes, as defined by the Office for National Statistics (ONS). These codes have been determined from both the most recent Inter-Departmental Business Register (IDBR) and data from Companies House for each Pay As You Earn (PAYE) enterprise. The findings from the 14 largest sectors are presented. The seven smaller sectors have been removed from the bulletin for presentational purposes, but their estimates are available in our accompanying datasets. 

The three largest sectors - wholesale and retail, health and social work, and education - account for around 40% of UK employees. These three sectors combined with administrative and support services; manufacturing; professional, scientific and technical; and accommodation and food service activities account for more than 70% of UK employees.

Since January 2017, employee growth has not been even across sectors (Figure 9). Sectors such as construction, transportation and storage, and information and communication experienced higher growth than the UK average between January 2017 and early 2020. Sectors such as manufacturing, and wholesale and retail experienced lower growth than the UK overall.

All sectors highlighted experienced a decrease in employee growth around April 2020, with the smallest decrease being in health and social work.

Public administration and defence, and health and social work saw early recoveries in their growth rates, as did administrative and support services, and education from early 2021 onwards.

When comparing early estimates for September 2023 with the same period of the previous year, percentage changes in payrolled employees ranged from negative 1.1% in administrative and support services to positive 4.4% in health and social work.

Figure 9: Employee growth has been very different across sectors

Percentage change on same month in previous year, seasonally adjusted, UK, January 2017 to September 2023

Notes:

1. The latest period is based on early data and therefore is more likely to be subject to slightly more significant revisions. 

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The increase in payrolled employees between September 2022 and September 2023 was largest in the health and social work sector (a rise of 182,000 employees) and smallest in the administrative and support services sector (a fall of 29,000 employees).

Median pay in September 2023 across the highlighted sectors ranged from £1,192 in the accommodation and food service activities sector to £3,753 in finance and insurance (Figure 11).

Compared with the same month in the previous year, median pay grew fastest in the transportation and storage sector, at positive 13.5% (Figure 12), and slowest in the health and social work sector, at negative 0.3%.

From June 2023 NHS workers started to receive a pay rise following an agreed pay offer from the government to eligible workers on the Agenda for Change contract. As well as a consolidated pay rise of 5%, this also included a pay rise backdated to April.

The pay offer for 2022 was paid to most NHS workers in September 2022, which also included lump-sum payments backdated to April 2022. While recent estimates of pay growth in the health and social work sector have included the effects of the pay offers for both 2022 and 2023, inflating the annual growth rate, the growth figures for September 2023 show only the effects of the 2023 pay offer. The growth rates for September 2023 are also comparing against the period in September 2022 in which monthly payments were higher because of the backdated pay, therefore deflating the growth rate for this month.

Estimates of mean pay for each sector are available in our accompanying datasets.

The age figures in this bulletin are calculated based on individuals’ age at the time they receive a payment.

Of the 30.1 million payrolled employees in the UK in September 2023, 94.5% are aged 18 to 64 years.

Between September 2022 and September 2023, there was a decrease of 30,000 payrolled employees aged under 25 years. During the same period, payrolled employees aged 35 to 49 years increased by 159,000.

Since 2019, the number of payrolled employees aged 65 years and over has increased at a faster rate than the UK as a whole, with employee growth peaking at 10.8% in January 2020 (Figure 14). This higher growth coincides with the phased increase in State Pension age between March 2019 and September 2020, for men and women aged 65 to 66 years. While growth rates fell in this age group during 2020, coinciding with the coronavirus (COVID-19) pandemic, they have now returned to above the UK average.

Conversely, growth in payrolled employees aged under 25 years has undergone long-term decline since 2017. These age groups saw large declines in growth rates during 2020, much steeper than those seen in the UK as a whole. Both groups have since seen positive growth rates, with employee growth peaking in those aged under 18 years at 74.9% in March 2022. However, this growth has declined in recent months.

Figure 14: Employee growth fell more sharply in younger age groups, but has risen more recently

Percentage change on same month in previous year, seasonally adjusted, UK, January 2017 to September 2023

Notes:

1. The latest period is based on early data and therefore is more likely to be subject to slightly more significant revisions.

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Median pay in September 2023 ranged from £412 for those aged under 18 years to £2,655 for those aged 35 to 49 years (Figure 15). Overall, median pay is higher in the central age bands, of those studied.

Median monthly pay

Median monthly pay shows what a person in the middle of all employees would earn each month. The median pay is generally considered to be a more accurate reflection of the "average wage" because it discounts the extremes at either end of the scale.

National Minimum Wage and National Living Wage

The National Minimum Wage (NMW) is a minimum amount per hour that most workers in the UK are entitled to be payrolled. There are different rates of minimum wage depending on a worker's age and whether they are an apprentice. The NMW applies to employees aged 16 to 24 years. The government's National Living Wage (NLW) was introduced on 1 April 2016 and applies to employees aged 25 years and over. See current and previous rates for the NMW and NLW on the government website.

Pay As You Earn

Pay As You Earn (PAYE) is the system employers and pension providers use to take Income Tax and National Insurance contributions before they pay wages or pensions to employees and pensioners. It was introduced in 1944 and is now the way most employees pay Income Tax in the UK. This publication relates to employees only and not pensioners.

Data source and collection

The data for this release come from HM Revenue and Customs' (HMRC's) Pay As You Earn (PAYE) Real Time Information (RTI) system. They cover the whole population rather than a sample of people or companies, and they will allow for more detailed estimates of the population. The release is classed as Experimental Statistics as the methodologies used to produce the statistics are still in their development phase. As a result, the series are subject to revisions.

Coverage

This publication covers employees payrolled by employers only. It does not cover self-employment income or income from other sources such as pensions, property rental and investments. Where individuals have multiple sources of income, only income from employers is included.

The figures in this release are for the period July 2014 to September 2023 and are seasonally adjusted.

Upcoming changes

Following the UK's withdrawal from the EU, a replacement to the Eurostat geographical classification NUTS regions has been created. The UK-managed classification of International Territorial Levels (ITLs) will replace the NUTS classification in future publications.

Please contact us by email if you would like to offer feedback on how the contents can be improved in the future.

Methodology

An accompanying article contains more information on the calendarisation and imputation methodologies used in this bulletin, alongside comparisons with other earnings and employment statistics and possible quality improvements in the future.

HM Revenue and Customs (HMRC) grants pre-release access to official statistics publications. As this is a joint release, and in accordance with the HMRC policy, pre-release access has been granted to a number of people to enable the preparation of statistical publications and ministerial briefing. Further details, including a list of those granted access to official statistics by HMRC, can be found on the HMRC statistics: pre-release access list web page.

Experimental Statistics status

This is a joint experimental release between HMRC and the Office for National Statistics (ONS). The existing monthly publications produced by the ONS remain the primary National Statistics for the labour market. The intention is that these new statistics will also be updated on a monthly basis.

The release is classed as Experimental Statistics as the methodologies used to produce the statistics are still in their development phase. This does not mean that the statistics are of low quality, but it does signify that the statistics are new and still being developed. As the methodologies are refined and improved, there may be revisions to these statistics.

Rather than waiting until the development work has been completed, the statistics are being published now to involve potential users in developing the statistics. We hope that this encourages users to provide us with their thoughts and suggestions on how useful the statistics are and how we can improve them. You can send us your comments by email.

More information about Experimental Statistics, including when they should be used and the differences between them and National Statistics, is available.

Strengths of the data

As Pay As You Earn (PAYE) Real Time Information (RTI) data cover the whole population, rather than a sample of people or companies, we are able to use these to produce estimates for geographic areas and other more detailed breakdowns of the population. The methods for producing such breakdowns are under development and we expect to include further statistics in a future release. These statistics can help inform decision-making across the country. They also have the potential to provide more timely estimates than existing measures.

These statistics also have the potential to replace some of those based on surveys, which could reduce the burden on businesses needing to fill in statistical surveys.

Industry Sector Classifications

The industrial sectors in this bulletin are based on the UK Standard Industrial Classification (SIC) codes, as defined by the Office for National Statistics (ONS). These codes have been determined from both the most recent Inter-Departmental Business Register (IDBR) and data from Companies House for each Pay As You Earn (PAYE) enterprise.

Large enterprises that cover multiple SIC codes are classified into a single SIC code based on the relative number of employees in each SIC code. Changes to the proportion of employees across SIC codes in large enterprises can result in the enterprise being reclassified to a different SIC code. As we link to the most recent quarterly version of the IDBR at the enterprise level, where an employer has been reclassified into a different SIC code, the most recent code is applied across the whole of the time series that is updated monthly.

This means that sector-level time series represent the current employers classified in each sector and are less likely to be distorted by employers being reclassified at the enterprise level because of small changes at the lower unit level. However, it also means that these time series may be revised between publications and, in the historical sections of the time series, employers are classified in sectors in which they were not classified at that point in time.

Imputation and revisions

RTI data used in this release are extracted in the weeks following the end of the latest reference month. For some individuals this means payments relating to work done in recent reference months are yet to be received. Rather than wait until all payment returns have been received, we produce timelier measures by imputing the values for missing returns.

For the latest reference month around 15% of the data are imputed. We refer to this as the "flash" or "early" estimate in the bulletin, as this figure is the most subject to revision as payment returns are received and the imputed payments replaced with actual data.

From our July 2022 publication, two changes were made to the imputation model. A seasonal factor was incorporated into the imputation model. The model was also made more responsive to recent changes to the labour market that would affect the likelihood of a payment existing. The latter change in particular should reduce the scale of revisions seen to the "flash" estimate, but cannot eliminate revisions completely.

Earlier months also contain some imputed data. Some payment frequencies mean that we have not received the relevant payment data more than a month after the reference period. Also, in some circumstances, returns might be submitted late. Therefore, earlier months are also subject to revision, but these revisions are likely to be much smaller because the level of imputation is smaller. The proportion of imputed data for a reference month two months before data extraction is around 1% to 2% of the data.

For the majority of months, post-flash revisions will occur in small amounts gradually each month as more submissions are received. However, all RTI submissions must be received before the end of the tax year. Therefore, for months close to the end of the tax year these submissions and associated minor revisions that would have accumulated through the year instead need to be received all at once in the final submissions of the tax year. The months of January and February will be most affected by this and see sharper non-flash revisions at the end of the tax year if the imputed submissions are not received by that point. From July 2022, changes were incorporated into the imputation model to try to control for these seasonal differences, as well as other seasonal factors that might affect whether submissions are received through different points of the year.

The seasonal adjustment model will also update each month as the model is refined on the latest data available. These adjustments will appear as revisions in the seasonally adjusted data, and in the supporting seasonally adjusted revisions triangle.

Starting with the December 2020 publication, we introduced a new revisions policy. For each publication, we incorporate new input data only for the current tax year and the previous tax year. Revisions to estimates can potentially be made for up to the last two years as data can continue to be received, though updates to data outside of the most recent tax year are minimal.

Changes to the seasonally adjusted data also occur earlier than this limit, as the seasonal adjustment model is refined. The benefit of introducing this revisions policy is that we can use the processing time saved to produce and publish more detailed breakdowns. We capture any new input data referencing earlier years by incorporating data for the whole time series once a year.

Seasonal adjustment

The seasonal adjustment applied in this bulletin follows established best practice. This approach assumes that any seasonal patterns remain broadly consistent over time. If the seasonal pattern changes in strength, this will be represented as greater volatility in the seasonally adjusted figures. Both the seasonal and non-seasonally adjusted datasets are released alongside this bulletin.

The model for seasonal adjustment is reviewed annually, with new models being applied where possible. The last update to the model has been delayed and is still currently being reviewed.

Differences compared with the Labour Force Survey and Average Weekly Earnings statistics

Further information about the methodology used and comparisons with the ONS's Labour Force Survey (LFS) and Average Weekly Earnings can be found in our New methods for monthly earnings and employment estimates from Pay As You Earn Real Time Information (PAYE RTI) data: December 2019 methodology.

The strengths and weaknesses of these sources and other labour market data sources are shown in our Comparison of labour market data sources methodology, including the advantages of new administrative data sources and limitations of some of our published figures.